Gov. LePage: Paying off hospitals right thing to do

Gov. Paul R. LePage

By Governor Paul R. LePage

Many Mainers know what it is like to juggle their bills until payday arrives. Imagine waiting four years.

That’s the reality for Maine’s 39 community hospitals. It is difficult to believe, but hospitals in dozens of Maine communities have not received payment from the state for Medicaid services they provided dating back to 2009.

Bridgton Hospital is owed $4.25 million. Stephens Memorial Hospital in Norway is owed $5.96 million. That’s more than $10 million in outstanding debt owed to these two hospitals alone. In total, the state owes Maine hospitals $484 million.

This debt is downright bad for business — not just for our hospitals, but for our state.

The negative impact of this debt cannot be understated. In a letter to me, Bridgton Hospital President David Frum wrote, “We have had selective layoffs, deferred hiring people, frozen wages and delayed capital projects due in part to our tenuous cash situation.”

The unpaid debt has played a major role in these hospitals’ management and operations. As the bills have gone unpaid, many hospitals have had to lay off employees and reduce benefits, borrow against lines of credit to meet payroll and other obligations, dip into savings and forgo interest delay payments to local vendors and eliminate services. Capital improvements, like building additions and renovations and the purchase of new equipment have been delayed.

The hospitals that employ and care for Maine people deserve better, and Maine’s economy demands it.

In 2010, I stood as a candidate outside of Central Maine Medical Center in Lewiston and said that if I became governor, I would make paying these bills a priority. During my first budget, I pushed to address the significant hospital debt by paying monies owed for years 2004-2008. I also worked to see that a new system for payment got implemented — a system that pays most hospitals in real time.

This week, I took the next step in making good on my promise — I proposed a plan to pay the remainder of the hospital debt that I inherited when I took office.

When the emergency legislation I have submitted is enacted, the state will immediately issue a revenue bond secured by future liquor sales to pay Maine’s $186 million share of the bill, triggering an instant $298 million federal match.

As part of this plan, the state will retain operational control over liquor sales starting in the summer of 2014 when the current 10-year private contract expires. That contract has cost Maine hundreds of millions, and my plan will be a far better deal for the state and consumers. We will contract out distribution and warehousing through a competitive, transparent bid process, and I believe under state management, we can actually grow this business by lowering prices on spirits so Maine can better compete with New Hampshire.

These actions make right two very costly wrongs of my predecessor: the bargain basement, shortsighted 10-year sell-off in 2004 of one of the state’s most reliable revenue streams — our liquor business — and the decision to stop settling-up our hospital bills in an attempt to grow welfare.

More importantly, they allow Maine to truly move forward. Because we’re finally erasing our old debt, I’ll issue $105 million in voter-approved bonds for transportation, conservation, clean water and construction at our state’s higher education institutions.

In total, nearly $600 million will be directly invested into Maine’s economy. From the dozens of letters of support I’ve already been sent, including from nearly every hospital in the state, I know that amount is just the start.

Most hospitals have told me they have capital improvement projects ready to come off the shelf and good paying positions to post.

Because this is the right thing to do and will have a dramatic effect in creating jobs and investment and improving Maine’s economy, I intend to get this legislation enacted quickly. This will also ensure the State capitalizes on the current Medicaid federal match rate before it falls further. With the full support of the legislature —which I hope can put politics aside and Maine people first — hospitals could receive their payments in a matter of months.

Some people will say that the hospitals should get in line with everyone else. The reality is they have been waiting in line for four years and it is time to fix the problem once and for all.

Hospitals do more than heal. They are economic drivers, not just in their communities where they are often the largest employer, but in our state, where they hire, build, educate and care for our loved ones. Let’s pay our bills and get Maine moving. It is, quite simply, the right thing to do.

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